Trading addition on low yield rejected where driage and inferior raw material explained the yield variation.

A trading addition based on alleged low yield and shortage of dana was deleted where the assessee showed that driage had to be allowed and the groundnut crushed during the year was of inferior quality. The record indicated that comparable cases in the same line of business had accepted driage at 2.5% and the appellate authority had allowed 5%, making the revenue's estimate unreasonable. The small variation in yield, read with the quality of the commodity and the need to allow driage, did not justify the addition.

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Issues: Whether the addition made on account of alleged low yield and shortage of dana was justified.

Analysis: The assessee's yield was compared with the preceding year, but the record showed that driage had to be allowed and that the groundnut crushed during the year was of inferior quality. An identical case in the same line of business had allowed driage at 2.5% and the appellate authority had allowed 5%, showing that the estimate adopted by the revenue was not reasonable. The small variation in yield, viewed in the light of the commodity quality and driage, did not support the addition.

Conclusion: The addition for low yield was not sustainable and was deleted in favour of the assessee.

Ratio Decidendi: A trading addition based on estimated yield cannot be sustained where the assessee's explanation regarding driage and inferior quality of raw material is plausible and the estimate adopted by the revenue is shown to be unreasonable.

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